Specific tax rule to prevent dividend washing
The Assistant Treasurer, David Bradbury, has announced that the Government will prevent "dividend washing" by introducing a specific integrity rule into the tax law. This follows the Government's announcement in the 2013-2014 Federal Budget that it will implement reforms to close, with effect from 1 July 2013, a loophole it believes currently enables some investors to engage in this practice.
"Dividend washing" potentially allows investors who undertake certain sophisticated share transactions to receive two sets of franking credits on what is essentially the same parcel of shares. Mr Bradbury says the proposed specific integrity rule will end this practice. He adds that the measure will not impact typical "mum and dad investors" as it will only apply to investors who have franking credit tax offset entitlements in excess of $5,000.